If you look at mankind in general, the reason why we’ve been able to survive for centuries is simply due to our ability to adapt. Regardless of climate, disease, predators, and even manmade threats, we’ve been able to adjust and survive. We’ve even improved our lifestyles and developed medicines that have extended our life expectancy on average of 30 years since the 1940’s alone. In order to survive, we need to change, constantly adjusting to whatever our environment becomes. Adaptation is a rule applies to every creature on earth in order to persevere and survive, and the world of business is no exception.
My father had a saying, “If you have an idea, someone else is either thinking it too or doing it.” In the world of business, you’d better hope your competitor is only thinking it and hasn’t started the process of doing it or even worse; already done it!
How the fast eat the slow
There are countless examples of companies that adapted to market changes and consumer trends, that have allowed them to maintain their position as an industry leader. While other companies didn’t have the vision or foresight to reinvent their services and overall offering.
To become an innovator in your industry takes vision, time, resources and money. But so does playing catchup to your competitor. The difference is; being the innovator is a proactive role and will give you an edge over the competition and redefine market expectations. Playing catchup is a reactive role – often a position of crisis, trying to stay current with industry trends that were set by the competition. Having to keep up with your competitor’s vision and influence in the market is a fatal loop to be caught in and one that could keep you spinning your wheels in the shadow of your competition for years, if not decades. You’re letting your competitor’s innovation determine how your business has to spend its operating budget and they are shaping your company’s decision making and priorities. That’s a hard trap to break free from.
Depending on your age, at one time when you thought about renting a movie, chances are you were one of millions who got in their car and drove over to Blockbuster Video. Blockbuster owned the video rental market for over 2 decades, but what the company didn’t do (or at least didn’t do a good job of) was look at the opportunities in the market, to reinvent their industry through emerging technologies to improve their service delivery model. It was business as usual, regardless of the improvements and standards the Internet was introducing to the world.
When Netflix first entered the market in 1997, Blockbuster wasn’t prepared for a new business model that would put an end to their business and the movie rental industry we then knew it, and shakeup the rental model Blockbuster and their customers had been so used to for nearly 3 decades. Netflix shook things up by solving 2 of the biggest inconveniences the movie rental process; 1) having to commute to rent the movie and 2) returning it without a penalty. They did this by allowing you to order your movie online and have the movie sent directly to your house. They even simplified the process by allowing you to build your rental list online and would send you the next movie on your list when your previous rental was returned. You could also return the movie whenever you wanted, with no late fees, your only penalty was you wouldn’t receive your next movie in your cue. As the internet gained more popularity and started playing a larger role in consumer shopping, Netflix accommodated what was fastly becoming a new way of life for buyers. Meanwhile, Blockbuster tried to play catch-up, replicating the Netflix marketing, but at the same time they were cannibalizing their own market, stealing sales from their own stores. If you ever visited a Blockbuster video store in the mid 2000’s you probably felt like you were in a ghost town. Blockbuster continued to try and regain ground with it’s copycat mail order business when Netflix had changed the industry again by moving to streaming content to its customers, replacing their original model of mail rentals, but their need to compete also put them in a position that would contribute to starving sales at their store level.
Between the years on 1999 and 2013 Netflix grew from 850 members to over 40 million worldwide. Today, Netflix’s revenue is nearly 4.5 billion. But Netflix was just the first problem for Blockbuster. Redbox put their hat in the game by redefining the video rental industry with its own concept of video rental kiosks conveniently located a in a variety of high traffic establishments consumers would regularly frequent, like grocery stores, pharmacies, convenience stores, and so on. Renting from Redbox meant one less waypoint on your map while you were running your errands.
Between 2003 and 2005 Blockbuster lost 75% of its market share to Netflix and Redbox, which painted a destructive and fatal picture for the company, all because they let someone else re-invent their industry.
Netflix and Redbox invested millions on deploying, marketing and perfecting their individual business models in the video rental industry. Because Blockbuster never adapted to the changing consumer trends in their industry, they had to invest millions just to copy their competitor’s business model, with 3 different market strategies; kiosks, online rentals and DVD by mail, while still managing their expensive store model which was dying by the week. It was an impossible battle to fight and the outcome was inevitable.
Extra! Extra! Information on demand destroys an entire industry!
Buying trends can have many different influences like supply and demand, economic adjustments, technology, lifestyle and so on. But nothing has shaped the way we buy and the way we prefer to interact with everyone and everything, than the influence of a generation. If you can’t adjust to shifts in the market influenced by the next generation or prepare for the change, consider your company to be on death row. Retail businesses or B2C models are more susceptible to this, but change (or failure to adapt to changing buying trends) will hold you back no matter how good your product or service.
Anyone in the Newspaper business will agree. For the past several years we’ve seen newspapers across the country, of all sizes, closing. Just like the Blockbuster story, they failed to re-invent themselves during opportunistic times. Unfortunately for the newspaper industry their fate was determined by a variety of alternative and better resources, who received acclaim for exceptional solutions in their respective fields of expertise. Craig’s list replaced classifieds, social media became a repository for breaking news, online advertising drove customers to buying with a click, mobile devices gave us access to news 24/7/365, instead of waiting for the breakfast to read what happened 24 hours ago. Newspaper circulation was reduced to a generation of subscribers who preferred to hold the sports pages and funnies in their hand why sipping coffee. Unfortunately, most people now prefer to swipe the screen of their mobile device to get the information they want. It didn’t matter that difference services or devices were needed to provide the content that could be delivered in a single edition of a newspaper, people were able to discard information they weren’t interested in and stay laser focussed on what matter most to them, by using hundreds of alternative media sources. Besides, who wants to walk downstairs and open the door to the frigid winter air and pick up their bundled, snow covered paper off the ground 15-feet from the front door, when you can read the news in bed?
Information on demand has given consumers far more than Newspapers ever could reaching beyond communicating information as we once knew it; real-time traffic, weather alerts, even the way we review products from a consumer perspective. Nobody cares about reading the column of some local authority on dining when you can read Yelp reviews. It must have been twenty years ago that I can remember checking movie times in the newspaper, when now I can just buy tickets from my phone with Fandango.
Unlike Blockbuster, Newspapers never really had a chance. Because their product offering was so diverse, the suspects in their death span around the block and down the street; from social media, to online news and entertainment, specialty services like Yelp, Angie’s List, Craig’s List, Fandango, Weather.com, Google, Yahoo and so much more; the end of their life was inevitable But just like the extinction of species over the past billion years, maybe this begs the question, “are some companies destined to die?”